Calculating the geometric and arithmetic average rate of​ return)  The common stock of the Brangus Cattle Company had the following​ end-of-year stock prices over the last five years and paid no cash​ dividends:   Time Brangus cattle Comapny 1 ​$15   2 12   3 14   4 24   5 25   ​(Click on the icon

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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(Calculating the geometric and arithmetic average rate of​ return)  The common stock of the Brangus Cattle Company had the following​ end-of-year stock prices over the last five years and paid no cash​ dividends:
 
Time
Brangus cattle Comapny
1
​$15
 
2
12
 
3
14
 
4
24
 
5
25
 
​(Click
on the icon
  
in order to copy its contents into a
spreadsheet.​)
 
a.  Calculate the annual rate of return for each year from the above information.
b.  What is the arithmetic average rate of return earned by investing in Brangus Cattle​ Company's stock over this​ period?
c.  What is the geometric average rate of return earned by investing in Brangus Cattle​ Company's stock over this​ period?
d.  Which type of average rate of return best describes the average annual rate of return earned over the period​ (the arithmetic or​ geometric)? ​ Why?
 
 
 

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Part 1
a.  The annual rate of return at the end of year 2 is
enter your response here​%.
​(Round to two decimal​ places.)
 
 
 
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